- The hottest topic now is that the IRS is targeting small and medium-size businesses with substantial cash flow and Sub-Chapter S filers. A just completed three-year study showed that up to 85% of businesses are noncompliant with many of the issues having to do with the requirement that Sub-Chapter S officers be on the W-2 payroll if they are active in the business.
- Another area of concern is the issue of loans to and from partners in partnerships, members of LLCs or stockholders in corporations. All such loans must be recorded in the company minutes and documented with loan agreements and real interest activity.
- Many small business owners have been charging personal items to the company and are unaware that too many of these business deductions are, in fact, not business deductions. Included in this area are vehicles used for personal and business use (business may only deduct business use). The same rules apply for purchasing meals for your employees (personal meals are never deductible).
- All businesses should be preparing Form 1099’s for all individuals to whom the business has paid $600.00 or more in the calendar year. Small businesses should start collecting information now on people to whom you have paid at least $600 during the year. You will need to collect the name, address, and tax ID number (which can be social security number or an employer identification number for each of these individuals). Form W-9 should be used to collect that information.
- The George W. Bush tax cuts are due to end soon. We will provide updates as soon as the decisions are made by our government.
For more information, please contact a Schneider Downs Tax Advisor today.
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